Sec. 220. Secure deferral arrangements

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Subsection

(k)of section 401, as amended by this Act, is amended by adding at the end the following new paragraph: A secure deferral arrangement shall be treated as meeting the requirements of paragraph (3)(A)(ii). For purposes of this paragraph, the term secure deferral arrangement means any cash or deferred arrangement which meets the requirements of subparagraphs (C), (D), and

(E)of paragraph (13), except as modified by this paragraph. For purposes of this paragraph, with respect to any employee, the term qualified percentage means, in lieu of the meaning given such term in paragraph (13)(C)(iii), any percentage determined under the arrangement if such percentage is applied uniformly and is— at least 6 percent, but not greater than 10 percent, during the period ending on the last day of the first plan year which begins after the date on which the first elective contribution described in paragraph (13)(C)(i) is made with respect to such employee, at least 8 percent during the first plan year following the plan year described in clause (i), and at least 10 percent during any subsequent plan year. For purposes of this paragraph, an arrangement shall be treated as having met the requirements of paragraph (13)(D)(i) if and only if the employer makes matching contributions on behalf of each employee who is not a highly compensated employee in an amount equal to the sum of 50 percent of the elective contributions of the employee to the extent that such contributions do not exceed 2 percent of compensation plus 30 percent of so much of such contributions as exceed 2 percent but do not exceed 10 percent of compensation. The rules of clause

(ii)of paragraph (12)(B) and clauses

(iii)and

(iv)of paragraph (13)(D) shall apply for purposes of clause

(i)but the rule of clause

(iii)of paragraph (12)(B) shall not apply for such purposes. The rate of matching contribution for each incremental deferral must be at least as high as the rate specified in clause (i), and may be higher, so long as such rate does not increase as an employee’s rate of elective contributions increases. . Subsection

(m)of section 401 is amended by redesignating paragraph

(13)as paragraph

(14)and by adding after paragraph

(12)the following new paragraph: A defined contribution plan shall be treated as meeting the requirements of paragraph

(2)with respect to matching contributions and employee contributions if the plan— is a secure deferral arrangement (as defined in subsection (k)(16)), meets the requirements of clauses

(ii)and

(iii)of paragraph (11)(B), and provides that matching contributions on behalf of any employee may not be made with respect to an employee’s contributions or elective deferrals in excess of 10 percent of the employee’s compensation. . Subpart

(D)of part IV of subchapter A of Chapter 1 of subtitle A is amended by adding at the end thereof the following new section: For purposes of section 38, in the case of an eligible employer maintaining a qualified employer plan (as defined in clauses

(i)and

(ii)of section 4972(d)(1)(A)), the secure deferral arrangement credit determined under this section for any taxable year is an amount equal to 10 percent of all matching and nonelective contributions under a secure deferral arrangement (as defined in section 401(k)(16)) made during the plan year ending with or within the taxable year of the eligible employer by or on behalf of employees other than highly compensated employees (as defined in section 414(q)). The amount of the credit determined under this section for any taxable year shall not exceed— $10,000 for the first credit year and each of the 2 taxable years immediately following the first credit year, and zero for any other taxable year. The term first credit year means— the taxable year of the eligible employer with which or within which ends the first plan year during which the secure deferral arrangement was in effect for the entire year, or at the election of the eligible employer, the taxable year preceding the taxable year referred to in paragraph (1). The term eligible employer has the meaning given such term by section 408(p)(2)(C)(i). All persons treated as a single employer under subsection

(a)or

(b)of section 52, or subsection

(m)or

(o)of section 414, shall be treated as one person. All qualified employer plans of an eligible employer shall be treated as 1 qualified employer plan. No deduction shall be allowed for that portion of the contribution for the taxable year which is equal to the credit determined under subsection (a). This section shall not apply to a taxpayer for any taxable year if such taxpayer elects to have this section not apply for such taxable year. Any such taxable year shall not be taken into account under subsection (b). . Subsection

(b)of section 38 is amended by striking plus at the end of paragraph (35), by striking the period at the end of paragraph

(36)and inserting , plus , and by adding at the end the following: the secure deferral arrangement credit determined under section 45S. . Subsection

(k)of section 401, as amended by subsection (a), is amended by adding at the end the following new paragraph: For a general business credit with respect to secure deferral arrangements, see section 45S. . Subsection

(m)of section 401, as amended by subsection (b), is amended by redesignating paragraph

(14)as paragraph

(15)and by inserting after paragraph

(13)the following new paragraph: For a general business credit with respect to secure deferral arrangements, see section 45S. . By no later than the date that is twelve months after the date of enactment of this Act, the Secretary of the Treasury shall prescribe rules that facilitate the administration of qualified automatic contribution arrangements (as defined in section 401(k)(13) of the Internal Revenue Code of 1986) and secure deferral arrangements (as defined in section 401(k)(16) of such Code). Such rules shall— clarify, simplify, and provide safe harbors with respect to the application of the notice requirements described in section 401(k)(13)(E) of such Code, especially in cases where— employees become eligible under such arrangements upon becoming employed or shortly thereafter, or the employer has employees subject to different payroll and administrative systems, and clarify, simplify, and provide safe harbors with respect to the timing of the increases in the qualified percentage described in subclauses (II), (III), and

(IV)of section 401(k)(13)(C)(iii) of such Code and in clauses

(ii)and

(iii)of section 401(k)(16)(C) of such Code, especially in cases where the employer has employees subject to different payroll and administrative systems. The amendments made by subsections

(a)and

(b)shall apply to plan years beginning after December 31, 2013. The amendments made by subsection

(c)shall apply to taxable years beginning after December 31, 2013.